Open letter to President Obama (Part 528) Milton Friedman discussing Margaret Thatcher’s success

Open letter to President Obama (Part 528)

(Emailed to White House on 6-10-13.)

President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500

Dear Mr. President,

I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is going on out here. Milton Friedman and Margaret Thatcher were two of my heroes and I know that you can learn a great deal from their lives and their economic philosophies. Ronald Reagan and Margaret Thatcher were both were influenced by Milton Friedman. I suggest checking out these episodes of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?”  and “Created Equal”  and  From Cradle to Grave, and – Power of the Market.

______________________

RARE Friedman Footage – On Keys to Reagan and Thatcher’s Success

Margaret Thatcher and Milton Friedman were two of my heroes.

Milton on Maggie

From the archives, we reproduce below two columns by Milton Friedman on the late Margaret Thatcher. Both columns appeared in Newsweek.


“Hooray for Margaret Thatcher” (Newsweek, 9 July 1979)

We have become so accustomed to politicians making extravagant campaign promises and then forgetting about them once elected that the first major act of Margaret Thatcher’s government— the budget unveiled on June 12—was a surprise. It did precisely what she had promised to do.

Margaret Thatcher campaigned on a platform of reversing the trend toward an ever more intrusive government—a trend that had carried government spending in Great Britain to somewhere between 50 per cent and 60 per cent of the nation’s income. Ever since the end of World War II, both Labor and Tory governments have added to government-provided social services as well as to government-owned and -operated industry. Foreign-exchange transactions have been rigidly controlled. Taxes have been punitive, yet have not yielded enough to meet costs. Excessive money created to finance deficits sparked an inflation that hit a rate of over 30 per cent a year in mid-1975. Only recently was inflation brought down to the neighborhood of 10 per cent, and it is once again on the rise.

  milton friedman and margaret thatcher
Photo credit: Robert Huffstutter

Most important of all, the persistent move to a centralized and collectivist economy produced economic stagnation. Before World War II, the British citizen enjoyed a real income that averaged close to twice that of the Frenchman or German. Today, the ratio is nearly reversed. The Frenchman or German enjoys a real income close to twice that of the ordinary Briton.

Margaret Thatcher declared in no uncertain terms that the long British experiment was a failure. She urged greater reliance on private enterprise and on market incentives. She promised to reduce the fraction of the people’s income that government spends on their behalf, and to cut sharply government control over the lives of British citizens. Her government’s budget is a major first step. It reduces the top marginal tax rate on so-called “earned” income from 83 per cent to 60 per cent, on “unearned” income from a confiscatory 98 per cent to 75 per cent. At the same time, it raises the level of income exempt from income tax and cuts the bottom rate from 33 per cent to 30 per cent. It proposes to cut government spending significantly, to sell some of the government’s industrial holdings and to promote the sale of government-owned housing units to their occupants. It loosens foreign-exchange controls substantially as a first step toward their elimination.

One retrograde step, in my opinion, is an increase in indirect taxes—the British general sales taxes, or VAT. This increase, which partly offsets the decrease in direct taxes, combined with lower spending will reduce government borrowing, facilitating a restrained monetary policy and releasing funds for private investment. The purpose is admirable. However, once taxes are imposed, it is hard to cut them. From the long-run point of view, it seems to me preferable to resort to a temporarily higher level of borrowing rather than to a possibly permanently higher level of indirect taxes.

I would also have preferred to see exchange controls eliminated completely rather than by degrees. The controls serve no constructive purpose. Eliminating them gradually only prolongs the harm and preserves a mischievous bureaucracy.

But these are quibbles. I salute Margaret Thatcher and her government for their courage and wisdom in moving firmly and promptly to cut Britain’s bureaucratic straitjacket. Britain has enormous latent strength—in human capacities, industrial traditions, financial institutions, social stability. If these can be released from bondage, if incentive can be restored, Britain could once again become a vibrant, dynamic, increasingly productive economy.

In the United States, when the President proposes a budget, that is only the beginning. Congress disposes, and it may take many months before the final result is determined. In Britain, the situation is different. What the Prime Minister and Cabinet propose in effect becomes law as of that day—subject only to a vote of no-confidence in the government and a new national election. However, when the party in power has a majority in the House of Commons as large as the Tories now have, that is a purely hypothetical possibility.

What happens in Britain is of great importance to us. Ever since the founding of the colonies in the New World, Britain has been a major source of our economic and political thought. In the past few decades, we have been moving in the same direction as Britain and many other countries, though at a slower pace. If Britain’s change of direction succeeds, it will surely reinforce the pressures in the United States to cut our own government down to size.

“Mitterrand Elects Thatcher” (Newsweek, 4 July 1983)

In 1981, as Britain slid into a deepening recession and unemployment mounted above the 2 million mark, the conventional political wisdom was that Margaret Thatcher’s days as prime minister were numbered unless she could manage to foster a prompt recovery in the economy that sharply reduced unemployment. Talk about a U-turn was the order of the day.

Margaret Thatcher stuck to her guns—proclaiming that U-turn was not in her vocabulary. The recession continued and unemployment kept going up. Yet three weeks ago, with more than 3 million unemployed, she was re-elected in a landslide, achieving the largest majority in Parliament since the postwar Labor landslide in 1945.

One source of her victory was a sharp decline in inflation, from 22 percent in early 1980 to 4 percent currently—fully realizing a major campaign promise. Yet, by itself, that could hardly have produced a landslide. The postmortems have stressed two other factors: the Falklands war and the disintegration of the Labor Party. The Falklands war enabled Mrs. Thatcher to demonstrate in a dramatic way a quality of leadership and a firmness of purpose that had been conspicuously lacking in her predecessors. The “Iron Lady” became an accolade, not an epithet.

The sharp left turn by the official Labor Party, the resulting formation of the Social Democratic Party and the alliance between the new party and the Liberals certainly played a major part in fragmenting the opposition to Mrs. Thatcher. As matters developed, there was simply no responsible alternative to Mrs. Thatcher, no credible alternative government.

However, this explanation lacks one essential ingredient: it omits the role of President Mitterrand.

France was suffering from the same ills when Mitterrand was elected president as Britain when Mrs. Thatcher became prime minister and the United States when Ronald Reagan became president—high and rising inflation, high unemployment and slow economic growth. Mitterrand’s attack on those ills was precisely the reverse of Mrs. Thatcher’s. On coming into office, Thatcher reduced taxes; Mitterrand increased them. Thatcher reduced controls over prices and wages; Mitterrand expanded them. Thatcher eliminated foreign-exchange controls; Mitterrand made them tighter. Thatcher moved to denationalize enterprises and reduce regulation, Mitterrand nationalized private banks and other enterprises and increased government intervention into the remaining private enterprise. Thatcher tried to hold down government spending, albeit with little success; Mitterrand went on a spending binge.

Had the Mitterrand policies succeeded, even if for only a year or so, Thatcher’s opposition in Britain would have been enormously strengthened. The Labor Party would have had a real alternative to offer—one that was consistent with its ideological propensities and that had worked on the other side of the Channel. The cry that Thatcher’s “monetarism” was a tragic failure could not have been dismissed as mere campaign rhetoric.

Instead, the Mitterrand policy was a clear failure. Inflation remained high. Unemployment went up. The government’s budget deficit soared. So did the deficit in the balance of payments. The franc had to be devalued three times in the past two years, despite massive government borrowing in a vain attempt to prop the franc up. Worst of all for Thatcher’s opposition, Mitterrand was forced to reverse course. The U-turn occurred across the Channel as the French government was driven to adopt the much-derided Thatcher policies.

Thatcher’s opposition was left intellectually bankrupt. It had no credible alternative policy to offer. The claim that she was an irresponsible demagogue imposing unnecessary costs on the British people rang hollow. Her persistence in the main lines of her policy was perceived by the voters as a realistic recognition that there was no easy cure for ills that had accumulated during decades.

The British experience is being repeated in the United States. The Democratic leaders attack Reaganomics as a failure, yet they, too, are intellectually bankrupt. They, too, have no credible alternative to offer, and many of them continue to attack the label while adopting the substance. Mitterrand has made no sharper U-turn than longtime New Dealers who have always praised deficits as a way to prime the pump and stimulate the economy but are now preaching the virtues of balancing the budget.


Click here to see the Hoover project showcasing the works of Milton and Rose Friedman.

Milton Friedman, recipient of the 1976 Nobel Memorial Prize for economic science, was a senior research fellow at the Hoover Institution from 1977 to 2006. He passed away on Nov. 16, 2006. He was also the Paul Snowden Russell Distinguished Service Professor Emeritus of Economics at the University of Chicago, where he taught from 1946 to 1976, and a member of the research staff of the National Bureau of Economic Research from 1937 to 1981.


Letters to the editor may be sent to definingideas@stanford.edu. Editors reserve the right to reject or publish (and edit) letters.

__________________

 

Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.

Sincerely,

Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com

Related posts:

Remembering Margaret Thatcher, 1925-2013

Remembering Margaret Thatcher, 1925-2013 Published on Apr 8, 2013 The world lost one of its greatest champions of freedom in Lady Margaret Thatcher. Ed Feulner, Edwin Meese III, and Becky Norton Dunlop remember her contributions as a great leader and friend of The Heritage Foundation. ________________ Great post from the Heritage Foundation on Margaret Thatcher’s legacy. […]

Margaret Thatcher and the Battle of the 364 Keynesians (includes editorial cartoon)

The stimulus program was a failure here in America and President Obama should have known better than to try that. He should have been a better student of history like Margaret Thatcher was. APRIL 9, 2013 3:24PM Margaret Thatcher and the Battle of the 364 Keynesians By  STEVE H. HANKE SHARE With the death of Margaret […]

Margaret Thatcher’s best quote?

Margaret Thatcher was right about socialism when she said, “The problem with socialism is that you eventually run out of other people’s money.” That is exactly what we are seeing in Europe now and it will happen to the USA too if we don’t cut back on excessive government spending. April 8, 2013 12:32PM Thatcher: Anecdotes From […]

Dan Mitchell’s tribute to Margaret Thatcher

Very well said by Dan Mitchell. A Tribute to Margaret Thatcher April 8, 2013 by Dan Mitchell The woman who saved the United Kingdom has died. A Great Woman I got to meet Margaret Thatcher a couple of times and felt lucky each time that I was in the presence of someone who put her nation’s […]

Margaret Thatcher was a great lady

  Margaret Thatcher was a great lady. Jim DeMint on Margaret Thatcher: “The World Has Lost One of Its Greatest Champions of Freedom” Jim DeMint April 8, 2013 at 9:05 am Heritage has lost one of her greatest friends, and the world has lost one of its greatest champions of freedom. Margaret Thatcher led Great […]

Margaret Thatcher defines socialism

  Great speech by Margaret Thatcher on socialism. It was not helpful to the people of eastern europe and it will not be helpful to us today. Defining Socialism Marion Smith December 10, 2012 at 5:25 pm   Margaret Thatcher on Socialism For those who failed to recognize the ideological stakes of the recent election, […]

Margaret Thatcher exposed the real liberal agenda

Uploaded by mynameiswhatever on Jan 18, 2009 Margaret Thatcher’s last House of Commons Speech on November 22, 1990. ________________ Prime Minister Margaret Thatcher: People on all levels of income are better off than they were in 1979. The hon. Gentleman is saying that he would rather that the poor were poorer, provided that the rich […]

Does the movie “Iron Lady” do Margaret Thatcher justice?

Unfortunately Hollywood has their own agenda many times. Great article from the Heritage Foundation. Morning Bell: The Real ‘Iron Lady’ Theodore Bromund January 11, 2012 at 9:24 am Streep referred to the challenge of portraying Lady Thatcher as “daunting and exciting,” and as requiring “as much zeal, fervour and attention to detail as the real […]

Margaret Thatcher (Part 5)

Margaret Thatcher is one of my heroes and I have a three part series on her I am posting. “What We Can Learn from Margaret Thatcher,”By Sir Rhodes Boyson and Antonio Martino, Heritage Foundation, November 24, 1999, is an excellent article and here is a portion of it below: What Can We Learn from Thatcher? […]

Margaret Thatcher (Part 4)

  Margaret Thatcher is one of my heroes and I have a three part series on her I am posting. “What We Can Learn from Margaret Thatcher,”By Sir Rhodes Boyson and Antonio Martino, Heritage Foundation, November 24, 1999, is an excellent article and here is a portion of it below: Thatcher This was the background […]

Margaret Thatcher (Part 3)

Margaret Thatcher is one of my heroes and I have a three part series on her I am posting. “What We Can Learn from Margaret Thatcher,”By Sir Rhodes Boyson and Antonio Martino, Heritage Foundation, November 24, 1999, is an excellent article and here is a portion of it below: The Role of Ideas 6 The […]

Margaret Thatcher (Part 2)

Margaret Thatcher (Part 2) Margaret Thatcher is one of my heroes and I have a three part series on her I am posting. “What We Can Learn from Margaret Thatcher,”By Sir Rhodes Boyson and Antonio Martino, Heritage Foundation, November 24, 1999, is an excellent article and here is a portion of it below: Foreign Policy […]

Margaret Thatcher (Part 1)

Margaret Thatcher (Part 1) Margaret Thatcher is one of my heroes and I have a three part series on her I am posting. “What We Can Learn from Margaret Thatcher,”By Sir Rhodes Boyson and Antonio Martino, Heritage Foundation, November 24, 1999, is an excellent article and here is a portion of it below: Margaret Thatcher […]

“Friedman Friday” Milton Friedman believed in liberty (Interview by Charlie Rose of Milton Friedman part 1)

Charlie Rose interview of Milton Friedman My favorite economist: Milton Friedman : A Great Champion of Liberty  by V. Sundaram   Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three US Presidents – Nixon, Ford and Reagan – died last Thursday (16 November, 2006 ) in San Francisco […]

What were the main proposals of Milton Friedman?

Stearns Speaks on House Floor in Support of Balanced Budget Amendment Uploaded by RepCliffStearns on Nov 18, 2011 Speaking on House floor in support of Balanced Budget Resolution, 11/18/2011 ___________ Below are some of the main proposals of Milton Friedman. I highly respected his work. David J. Theroux said this about Milton Friedman’s view concerning […]

“Friedman Friday,” EPISODE “The Failure of Socialism” of Free to Choose in 1990 by Milton Friedman (Part 1)

Milton Friedman: Free To Choose – The Failure Of Socialism With Ronald Reagan (Full) Published on Mar 19, 2012 by NoNationalityNeeded Milton Friedman’s writings affected me greatly when I first discovered them and I wanted to share with you. We must not head down the path of socialism like Greece has done. Abstract: Ronald Reagan […]

Defending Milton Friedman

What a great defense of Milton Friedman!!!!   Defaming Milton Friedman by Johan Norberg This article appeared in Reason Online on September 26, 2008  PRINT PAGE  CITE THIS      Sans Serif      Serif Share with your friends: ShareThis In the future, if you tell a student or a journalist that you favor free markets and limited government, there is […]

Milton and Rose Friedman “Two Lucky People”

Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 2 of 2 Uploaded by PenguinProseMedia on Oct 26, 2011 2nd half of 1994 interview. ________________ I have a lot of respect for the Friedmans.Two Lucky People by Milton and Rose Friedman reviewed by David Frum — October 1998. However, I liked this review below better. It […]

Video clip:Milton Friedman discusses his view of numerous political figures and policy issues in (Part 2)

Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 1 of 2 Uploaded by PenguinProseMedia on Oct 25, 2011 Says Federal Reserve should be abolished, criticizes Keynes. One of Friedman’s best interviews, discussion spans Friedman’s career and his view of numerous political figures and public policy issues. ___________________ Here is a review of “Two Lucky People.” […]

Milton Friedman believed in liberty (Interview by Charlie Rose of Milton Friedman part 1)

Charlie Rose interview of Milton Friedman My favorite economist: Milton Friedman : A Great Champion of Liberty  by V. Sundaram   Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three US Presidents – Nixon, Ford and Reagan – died last Thursday (16 November, 2006 ) in San Francisco […]

“The Failure of Socialism” episode of Free to Choose in 1990 by Milton Friedman (Part 1)

Milton Friedman: Free To Choose – The Failure Of Socialism With Ronald Reagan (Full) Published on Mar 19, 2012 by NoNationalityNeeded Milton Friedman’s writings affected me greatly when I first discovered them and I wanted to share with you. We must not head down the path of socialism like Greece has done. Abstract: Ronald Reagan […]

Post a comment or leave a trackback: Trackback URL.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: